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Global markets dipped as tensions in the Middle East and uncertainty around central banks made investors more cautious. Traders are now watching for clearer signals to understand where markets might go next.
Geopolitical tensions drag global markets lower
The S&P 500 edged lower on Tuesday, ending the session at 6018.10 after briefly testing resistance near 6057.4.
The index declined by 0.38%, reflecting a cautious mood across global markets as traders responded to renewed geopolitical uncertainty and central bank developments.
European and Asian stock markets also moved lower, with early European futures pointing to continued weakness.
Investor nerves were rattled overnight following intensified military exchanges between Israel and Iran, dampening expectations of a short-lived conflict.
Sentiment further deteriorated when former US President Donald Trump reportedly called on Iranians to evacuate Tehran and convened a national security meeting. His early exit from the G7 summit added fuel to speculation about broader US involvement.
Oil and gold rise as investors seek safety
Although the White House denied any immediate military action, Defence Secretary Pete Hegseth stated that the US is prepared to protect its regional interests if necessary.
The escalation in conflict pushed oil prices sharply higher, with Brent and WTI crude futures gaining another 2% in Asian trading – extending the rally that began last Friday, which has already seen a 7.5% surge.
While energy stocks benefitted from rising commodity prices, broader equity markets remained under pressure. Gold prices remained firm near recent highs, supported by safe-haven demand.
In currency markets, the impact was more muted. The US dollar regained favour as a safe-haven asset, even as markets maintained expectations of a potential interest rate cut by the Federal Reserve later in the year.
The euro and Japanese yen held steady following central bank comments, while bond yields remained flat as investors awaited further direction.
Technical analysis
Looking ahead, market attention is firmly on upcoming central bank meetings. The Bank of Japan, as anticipated, left interest rates unchanged but signalled a more gradual pace of bond tapering.
The move was interpreted as a sign of ongoing caution rather than a shift towards policy normalisation. Market reaction was limited, with the yen and Japanese government bond (JGB) yields showing little change.
On the 15-minute chart, the S&P 500 continues to display signs of exhaustion after a gradual climb stalled at the 6057.4 resistance level.
The index has since retreated towards the 6000–6012 support area, with momentum indicators suggesting a potential loss of bullish steam.
The MACD histogram has flattened, and the MACD and signal lines are converging — typically a sign of weakening upward momentum.
Since bouncing from the 5950.1 low on 14 June, the index has been supported by gains in technology stocks.
However, current price action suggests consolidation, with the S&P 500 hovering just above the 30-period moving average.
A sustained break above the 6050–6060 resistance zone has yet to materialise, which has capped gains in recent sessions.
With geopolitical risks still unresolved and several key central bank decisions on the horizon, market volatility may increase towards the end of the week. Traders are likely to remain cautious, adjusting positions as new data and policy signals emerge.
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